Housing warning over homes shortage

The country's housing crisis will deepen due to a failure to build enough homes to cope with a baby boom in the last decade, a report has warned.

PUBLISHED: 00:36, Mon, Jul 22, 2013

A report warned that not enough new houses are being built to cope with last decade's baby boom [PA]

George Osborne's measures to boost the property market could create another house price bubble unless more was done to increase the supply of new homes, the National Housing Federation (NHF) claimed.

The report said the Chancellor's measures were "sticking plaster answers" but the situation demanded a long-term plan to get Britain building and action from local councils to construct new homes in their areas.

It said that a baby boom in the 1980s, which saw birth rates jump in England by 13% between 1982 and 1990, had created a "jilted generation" now in their late 20s and early 30s and struggling with housing costs. It warned that history was set to repeat itself following a further increase in the birth rate in England in the 2000s.

The report said: "England experienced a further baby boom with 6.9 million live births between 2001 and 2011. In 2020, the first children from this boom will be turning into ambitious young men and women, looking to move out, find work and kick-start their adult lives. This will put a massive strain on an already beleaguered English housing market."

Research has predicted rents in 2020 will be 46% higher than they are today and the cost of the average first-time buyer's home will be £245,165. The shortage of affordable housing will mean 3.7 million young people living with their parents in 2020, an increase of 700,000.

The report said: "Young people are stuck in a vicious cycle - because we aren't building enough homes, house prices continue to rise. This increases the demand for private rented accommodation which, in turn, pushes up rents. High rents make it very difficult for young people to save for a mortgage deposit - the amounts of which will continue rising because house prices are going up.

"The Government is trying to tackle some of these problems. Last year it asked Sir Adrian Montague to look at the private rented sector. In his review, Sir Adrian called for more investment in and reform of the sector. This led to the Chancellor announcing in this year's Budget that £1 billion will be made available towards building more private rented homes, and a scheme, Help-to-Buy, designed to boost home ownership by helping more people onto the housing ladder.

"But making mortgage deposits cheaper to aspirant homeowners without increasing housing supply doesn't tackle the root of the problem. It simply risks creating another housing bubble where prices are pushed up... Britain must get building again now. The future of the country - and our young people - depends on it."

National Housing Federation director Ruth Davison said: "We failed to fix the housing market for the eighties baby boomers because we simply didn't build enough homes. This means that, even with decent jobs, many are now struggling to raise a mortgage deposit or pay their rent. But rather than learn from past mistakes, the country is still not building enough homes to tackle the problem."